This week we’ll begin with our monthly and weekly forecasts of the currency pairs worth watching. The first part of our forecast is based upon our research of the past 16 years of Forex prices, which show that the following methodologies have all produced profitable results:
Trading the two currencies that are trending the most strongly over the past 3 months.
Assuming that trends are usually ready to reverse after 12 months.
Trading against very strong counter-trend movements by currency pairs made during the previous week.
Buying currencies with high interest rates and selling currencies with low interest rates.
Let’s take a look at the relevant data of currency price changes and interest rates to date, which we compiled using a trade-weighted index of the major global currencies:
Monthly Forecast July 2018
For the month of July, we forecast that the best trades will be long USD/JPY and long USD/SEK.
For the month of June, we forecast that the best trade would be long USD/SEK. The final performance was positive, as shown below:
Currency Pair
Forecast Direction
Interest Rate Differential
Final Performance
USD/SEK
Long ↑
2.50% (2.00% – -0.50%)
1.53%
Weekly Forecast 1st July 2018
Last week, we forecast that the USD/MXN currency pair would rise in value. Unfortunately, it fell in value by 0.50%.
This week, we make no forecasts, as there were no strong counter-trend movements.
This week has been dominated by relative strength in the Canadian Dollar and the Euro, and relative weakness in the New Zealand Dollar.
Volatility was higher last week, with one third of the major or minor currency pairs changing in value by more than 1%. Volatility is likely to be even higher over the coming week.
Previous Monthly Forecasts
